Disney Earnings Plummet More Than 90% As Coronavirus Wipes Out More Than $1 Billion

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Walt Disney Co. profit dove more than 90% in the second quarter, an example of the drastic effects on the company from the COVID-19 pandemic, which executives said cost the media giant more than $1 billion in profit just in its theme-parks division.

Disney DIS, -2.05% reported fiscal second-quarter profit of $460 million, or 26 cents a share, on sales of $18.01 billion, up from $14.9 billion in the year-ago quarter, which included only a few days of results from Disney’s $71 billion acquisition of Fox assets. In that quarter, though, Disney reported profit of more than $5 billion, with a boost from the acquisition of a controlling interest in Hulu.

After adjusting for restructuring charges and other effects, Disney reported earnings of 60 cents a share, down from $1.61 a share in the year-ago quarter. Analysts on average expected Disney to report adjusted earnings of 91 cents a share on sales of $18.06 billion, according to FactSet, but those numbers have been slashed in recent weeks as the coronavirus has spread across the globe and Disney has closed its theme parks and ceased movie production. As of the end of January, analysts on average expected adjusted earnings of $1.40 a share on sales of $19.51 billion.

“While the COVID-19 pandemic has had an appreciable financial impact on a number of our businesses, we are confident in our ability to withstand this disruption and emerge from it in a strong position,” said Bob Chapek, who took over as chief executive of Disney from Robert Iger during the quarter.

While Chapek now sits in the CEO chair, Iger — who has taken on the role of executive chairman— was the first to speak Tuesday afternoon on Disney’s conference call, and sounded a similar refrain of resilience and a future rebound.

“As someone who has been around for a while and led this company through some really tough days over the last 15 years, including economic downturns, natural disasters and other unforeseen events, I have absolute confidence in our ability to get through this challenging period and recover successfully,” Iger said.

Disney executives provided little clarity about near-term financial effects, though, beyond saying that the direct-to-consumer segment would record an operating loss of more than $1 billion in the third quarter. Chief Financial Officer Christine McCarthy said that Disney will not pay a semiannual dividend that would have been expected in July, saving approximately $1.6 billion.

Disney shares bounced between gains and losses of about 1% in after-hours trading immediately following release of the results, but fell to a decline of more than 2% during the conference call. Disney stock has declined more than 30% so far this year, as the Dow Jones Industrial Average DJIA, +0.56% — which counts Disney as a component — has declined 16.8%.

Disney has faced some of the biggest fears from Wall Street about its business during the coronavirus crisis, as its largest units are centered around on-premises interactions that have been shut down during shelter-in-place orders: Theme parks and cruise lines, movies and live sports, for example.

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